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Writedowns hurt Foster's net
SYDNEY, Australia (CNN) -- Australian beer and wine giant Foster's Group has posted a 17 percent drop in full year earnings to A$463 million ($301 million) after restructuring costs and writedowns. But Foster's CEO Ted Kunkel told CNN Tuesday that the group's normalized net profit was up 9 percent to A$626.7 million and it was generating superior cash flow to its rivals. Foster's lifted revenue 1.5 percent to just over A$5.24 billion as the appreciating Australian dollar offset a 3 percent rise in sales. Kunkel said the group had maintained its strong margins in beer and wine, though the wine profit was hit by currency movements and a tough California market. Kunkel told CNN the addition of premium wine brands in recent years to the traditional beer business of Foster's gave the group "enormous firepower", flowing from diversity and geographic and currency balance. In a statement accompanying release of its results Tuesday, Foster's said it believed markets would remain "challenging" in the 2003-04 financial year. As a result, it said it expected its normalized earnings growth to be similar to 2002-03. Earlier this month, Foster's said it aimed to raise A$1.4 billion ($920 million) by spinning off its hotel, gaming and retail liquor operations. It plans to sell its Australian Leisure and Hospitality (ALH) division through an initial public offer. Kunkel said at the time the ALH business was not seen as essential to building brand equity across the group's wine and beer businesses. Its beer brands include Foster's, VB, Carlton and Cascade, while key wine brands include Wolf Blass, Yellowglen and Beringer. Foster's spent $1.6 billion in 2000 to buy the U.S.-based Beringer Wines. Shares in Foster's are down 0.65 percent to A$4.56 near midday Tuesday. The broader market is off about 0.15 percent.
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